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Will Big Lots (BIG) Disappoint This Earnings Season?

KR COST BIG FIVE

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Big Lots Inc. (BIG - Analyst Report) is slated to report third-quarter fiscal 2013 results on Dec 6, 2013. In the previous quarter, it posted a positive surprise of 24.0%. Let us see how things are shaping up for this announcement.

Factors in the Past Quarter

Big Lot’s second-quarter fiscal 2013 earnings beat was mainly driven by the company’s robust performance in Canada. Sales at its Canadian operations increased 8.2% to $37.9 million, while comparable-store sales registered growth of 8.3%.

Earnings Whispers?

Our proven model does not conclusively show Big Lots as likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: ESP for Big Lots is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stands at a loss of 8 cents.

Zacks Rank #2 (Buy). Big Lots’ Zacks Rank #2 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings surprise call. We caution against stocks with Zacks #4 and 5 Ranks (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat:  

Five Below, Inc. (FIVE - Snapshot Report) with Earnings ESP of 25.0% and Zacks Rank #2 (Buy)

The Kroger Co. (KR - Analyst Report) with Earnings ESP of 1.89% and Zacks Rank #3 (Hold)

Costco Wholesale Corporation (COST - Analyst Report) with Earnings ESP of 0.97% and Zacks Rank #3 (Hold)

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